Provision of community benefits by tax-exempt U.S. hospitals

Abstract

Background: The Patient Protection and Affordable Care Act (ACA) requires tax-exempt hospitals to conduct assessments of community needs and address identified needs. Most tax-exempt hospitals will need to meet this requirement by the end of 2013.

Methods: We conducted a national study of the level and pattern of community benefits that tax-exempt hospitals provide. The study comprised more than 1800 tax-exempt hospitals, approximately two thirds of all such institutions. We used reports that hospitals filed with the Internal Revenue Service for fiscal year 2009 that provide expenditures for seven types of community benefits. We combined these reports with other data to examine whether institutional, community, and market characteristics are associated with the provision of community benefits by hospitals.

Results: Tax-exempt hospitals spent 7.5% of their operating expenses on community benefits during fiscal year 2009. More than 85% of these expenditures were devoted to charity care and other patient care services. Of the remaining community-benefit expenditures, approximately 5% were devoted to community health improvements that hospitals undertook directly. The rest went to education in health professions, research, and contributions to community groups. The level of benefits provided varied widely among the hospitals (hospitals in the top decile devoted approximately 20% of operating expenses to community benefits; hospitals in the bottom decile devoted approximately 1%). This variation was not accounted for by indicators of community need.

Conclusions: In 2009, tax-exempt hospitals varied markedly in the level of community benefits provided, with most of their benefit-related expenditures allocated to patient care services. Little was spent on community health improvement.